Emergent Research

EMERGENT RESEARCH is focused on better understanding the small business sector of the US and global economy.

Authors

The authors are Steve King and Carolyn Ockels. Steve and Carolyn are partners at Emergent Research and Senior Fellows at the Society for New Communications Research. Carolyn is leading the coworking study and Steve is a member of the project team.

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Disclosure Policy

Emergent Research works with corporate, government and non-profit clients. When we reference organizations that have provided us funding in the last year we will note it.
If we mention a product or service that we received for free or other considerations, we will note it.

Assistant Edge

New Localism

November 28, 2017

The National League of Cities recently released Discover Your City's Maker Economy, a report that "provides a roadmap for cities to develop policies, programs and a culture that better supports local maker businesses."

The thrust of the report is that "maker-entrepreneurs" - individuals or micro-businesses who create (either by design or fabrication) and sell tangible products - are potentially the future of manufacturing.

The report also suggests the maker movement can drive employment opportunities and provide more inclusive access to entrepreneurship.

April 14, 2016

Platform Cooperativism is the term being used to describe the combination of coop business structures with online platforms that delivers real-world goods or services.

Coops are basically businesses owned and controlled by the members that they serve. This means that decisions made in cooperatives balance the need to be financially viable with the needs and interests of members and their communities.

In other words, coops aren't just profit focused or as profit focused as most venture backed startups.

Coops are not new nor are they uncommon. U.S. Credit Unions and mutual insurance companies are coops. Other large examples include Ace Hardware, which is cooperatively owned by Ace's independent retailers and Sun Made Raisins, which is owned cooperatively by raisin farmers.

Platform coops are simply coops that provide online platforms or marketplaces. Examples include New Zealand's Ensprial, a cooperatively owned and operated freelancer network, Loconomics, a coop version of Task Rabbit and Fairmondo, a co-op version of eBay.

The goal of these and the platform cooperativism movement in general is to give platform providers, workers and sellers more power and, hopefully, more income.

With these new middlemen sucking profits out of previously un-monetized interactions, creating new forms of hyper-exploitation, and spreading precarity throughout the workforce, what can we do? Scholz insists that we need not just resistance but a positive alternative. He calls this alternative “platform cooperativism,” which encompasses new ownership models for the Internet. Platform cooperativism insists that we’ll only be able to address the myriad ills of the sharing economy—that is to say platform capitalism—by changing ownership, establishing democratic governance, and reinvigorating solidarity.

As you may have surmised from the title, the article is still not real positive about Uber and other VC backed on-demand companies. It also offers a blueprint on how worker owned coops could potentially compete with these firms.

Platform cooperativism is a reaction to the growth and power of VC backed online platform companies. It's also part of the broader set of concerns about income inequality, worker rights, wage stagnation and the view that corporations are abusing their power.

While we think cooperative platforms are unlikely to unseat the "death star" platforms anytime soon, it's an important movement to pay attention to.

Growing unrest with current economic conditions is leading to a number of politically driven changes. For example, there is now a clear, national movement to increase the minimum wage to $15.

It's quite possible the platform cooperativism movement will lead to new on-demand economy regulations. But even if they don't, it's nice to have alternatives - and especially alternatives that are worker friendly.

October 19, 2015

The New Yorker's The New Guilded Age provides an excellent historical overview of guilds and their potential return. Key quote:

From roughly the turn of the first millennium to the French Revolution, guilds operated as associations of independent craftspeople, setting standards for their lines of work and cultivating lively subcultures around their labor.

The article focuses on Prime Produce, a New York city coworking collective. Instead of being owned and operated by a company, Prime Produce will be owned by the members. Again from the article:

Prime Produce is exploring a model in which many members will be co-owners of a cooperative firm, which will manage the proceeds of their dues and pay rent to the sympathetic investors who own the buildings.

We first got interested in guilds way back in 2007 when we were doing research for the Intuit 2020 New Artisan Economy report. Based on this work, guilds seemed like a logical way for new artisans to organize.

And the growing interest in co-ops and other forms of collective ownership is clearly leading to increasing numbers of guild-like organizations, with Prime Produce being a good example.

We're also seeing a rise in the number of "loosely-coupled" groups of independent workers who team up to work together in a guild like way. Key quote from the 2015 MBO Partners State of Independence report:

In 2015 36% of independent workers reported spending about $101 billion in the past year hiring other independent workers on a contract basis ... This is roughly the equivalent of employing 2.4 million full-time workers via traditional hiring.

Independents’ hiring of other Independents is part of a broader collaboration trend in the new economy. In essence, Independents team up with other Independents to pool their talents and address more complex challenges in the marketplace … These teams effectively constitute a new form of project-specific small business that operates with a flexible and agile staffing model.

These loosely coupled groups of workers look in many ways like the guilds of yore. We continue to think guild like organizations make a lot of sense in the new economy. We expect to see more of them.

"Makers increasingly create new products and build small businesses based on innovative use of technology, processes, and business models. They represent a growing force of hobbypreneurs contributing to the U.S. and global economy."

At the time we wrote this report,this was controversial.

Makers were considered hobbyists, amateur crafters, tinkerers and the heirs to the DIY consumer movement of the 1950s and 1960s. They weren't viewed as a source of new businesses. The folks from Maker Faire even told us we were wrong to think of Makers as potential entrepreneurs.

"a proliferation of high-tech but affordable manufacturing tools and new sources of funding are empowering a generation of handy entrepreneurs and laying the foundation for a hardware renaissance."

The rise of Makers, crafters and others turning hobbies, passions and interests into small businesses is being enabled by a growing support infrastructure that allow these businesses to be started cheaply and easily.

Etsy, of course, is an obvious example of this growing infrastructure. It makes it inexpensive and easy for a crafter to open an online store with immediate reach to millions of potential customers.

In addition to their consumer site, they've also created a wholesale channel for their sellers. This makes product distribution into the retail channel much easier.

They also recently acquired Grandst.com, which is an Etsy-like marketplace for "creative technology". This will likely greatly expand the customer base for all kinds of gadgets developed by Makers and small manufacturing companies.

Financing has also gotten easier. A range of companies are now offering various forms of loans and advances to small and micro businesses. Crowdfunding and more recently equity crowdfunding are also being increasingly used by these types of businesses.

But although it's gotten cheaper and easier to turn a hobby, passion or interest into a business, for most hobbypreneurs it's still about their passions. The chart below - from Etsy's Redefining Entrepreneurship report - shows starting these business is about much more than the money.

March 18, 2014

The paradox is even though the Internet and connective technologies has made working remotely easier than ever, people and companies are increasingly clustering together in fewer, more valuable locations.

What's happening San Francisco is an obvious example. There's almost a land grab frenzy of companies and people moving into the city. But it's not just San Francisco nor just places with a lot of tech companies. All over the world, people are moving to cities and near-in suburbs.

This paradox is happening because in our knowledge-intensive world, industries and people cluster in order to share information, generate ideas and cut deals. These activities are all still better done face to face.

Companies also cluster to access talent, which is attracted to urban areas due to job opportunities and the amenites urban or near-in suburban living provide.

This paradox extends to freelancers and other independent workers.

Given how expensive cities tend to be relative to small towns or rural areas and how easy it is to telework, why do the so many independent workers choose to live in urban areas - and especially places like SF and New York?

We've been exploring this issue and the quick answer appears to be the same reasons companies and traditional employees are clustering - place matters to freelancers too.

This is, of course, not exclusively true. Growing numbers of Digital Nomads are wandering the earth and teleworking from the remotest of locations. And telecommuting is on the rise, especially for independent workers.

But for most independent workers, place matters.

The Brookings Institute has been doing a lot of work on clusters and cities. The very brief video below does a nice job of summarizing their point of view.

... the rich are increasingly hunting for unique objects and experiences ... luxury is shifting rapidly from 'having' to 'being' – that is, consumers are moving from owning a luxury product to experiencing a luxury ...

We agree but would add it's not just the rich shifting their spending to experiences. Consumers in all income brackets are looking for unique and unusual experiences.

For many, it’s the experience that attracts them to food trucks. More than 80 percent of those interviewed used words like fun, exciting, new, different, unusual and unique when asked why they dined at food trucks.

This is all part of the broader shift to an experience economy that we believe will continue to gain strength over the next decade.

February 03, 2014

I'm writing this article on the Friday before the Superbowl and it's already been viewed online 25 million times. For those who haven't seen it, it shows a labrador puppy making friends with a Clydsdale on a ranch.

While I like the ad, I'm more intrigued by the trends the ad represents.

The first is the growing role pets are playing in society and the broader trend of pet humanization. This is the trend towards pet owners seeing their pets as full fledged family members and themselves as "pet parents" instead of pet owners.

While puppies have long been an advertising staple, this ad truly humanizes both the puppy and the Clydsdale in the way they make friends and interact. This, of course, will appeal to the large and growing group of people who humanize their pets.

The ad also taps into the trend towards a return to simplicity, authenticity and quality.

In the ad the farmer/dog breeder - who's obviously a rugged and independent yet sensitive kind of guy - is shown working with hands. This harkens us back to the authentic, quality oriented days of yore.

This is, of course, our stylized view of the days of yore and not how the days of yore really worked. But hey, it's advertising.

This vision of the solo farmer working his ranch ties into several related trends we track:

New Localism is shift towards Americans relearning the value of community and reestablishing stronger ties with family, friends and their communities. Part of the new localism trend is a growing interest in local, unique, products that look and feel authentic.

The New Artisans are people focused on exploring the combination of new and old ideas, approachs and methods to create high-quality, niche products.

It's interesting to see Budweiser tie into so many trends in one ad - and do so with great effectiveness.

"You may have noticed it, here and there: more smaller brands, more toys with an eco angle. More craft-oriented, or retro toys. Maybe more
unusual toys, tech-enabled toys and toys that teach ... But why is this happening now? All roads lead to the Internt and
its democratising ability: networked knowledge, networked contacts, networked
marketing and even networked manufacturing."

June 18, 2013

Several broad forces, most of them peculiar to our times, are combining to create advantageous conditions for small companies. For starters, consumers are demanding broader selection. “Selectionists,” who comprise 30 percent of the consumer market, seek greater variety and new tastes—and sometimes care deeply about other factors such as the origins of the food and how far it has been shipped. Selectionists have a stronger interest in local, boutique foods and beverages.

The chart below (from the article) shows that small firms are outperforming big firms in sales growth in 18 of the 25 categories measured.

Also interesting is the article points out that smaller firms tend to have premium prices. Key quote:

In areas where big players are least capable—such as in organic, artisanal, or regional brands—small players are more likely to take a superpremium position.

Regular readers know we've long followed these trends. And it's not just the consumer packaged goods industry that is seeing small firms increase their market share.

Aquaponics creates a sustainable, synergistic food growing system. Fish waste from the fish tanks feeds the plants. The plants also clean and filter the water, which is then returned to the fish tanks.

Making this even cooler, aquaponics farms are starting to sprout up in old warehouses and industrial buildings in the upper midwest. Key quote from article:

The concept seems especially appealing in the upper Midwest of the United States, which has a surfeit of abandoned industrial buildings, a short growing season for high-value, highly perishable crops like arugula, baby lettuces, herbs, and microgreens, and an overburdened Great Lakes fishery. Large indoor aquaponics farms such as The Plant and FarmedHere in Chicago and Sweet Water Organics in Milwaukee have sprung up in the last five years.

Aquaponics taps into the growing demand for local, organic and fresh food. It also potentially takes advantage of the large number of empty industrial buildings and warehouses that exist in many major American cities.

While the economics are not yet fully proven, it's an exciting addition to the small farm and urban farm scene.